THE CO-OPERATIVE BANK OF KENYA LIMITED AND SUBSIDIARIES ANNUAL REPORT AND FINANCIAL STATEMENTS 31 DECEMBER 2006

AND SUBSIDIARIES ANNUAL REPORT AND FINANCIAL STATEMENTS 31 DECEMBER 2006 ERNST & YOUNG

ANNUAL REPORT AND FINANCIAL STATEMENTS CONTENTS PAGE Bank Information 1 4 Report of the Directors 5 Statement of Directors Responsibilities 6 Report of the Independent Auditors 7 Financial Statements: Consolidated Balance Sheet 8 Consolidated Income Statement 9 Bank Balance Sheet 10 Bank Income Statement 11 Consolidated Statement of Changes in Equity 12 Consolidated Cash Flow Statement 13 Notes to the Financial Statements 14-40

BANK INFORMATION BOARD OF DIRECTORS MANAGING DIRECTOR G. M. Muriuki, OGW COMPANY SECRETARY R. M. Githaiga (Mrs) S. C. Muchiri, EBS - Chairman J.Riungu - Vice Chairman J. Sitienei P. K. Githendu G. Mburia R. L. Kimanthi E.K. Mbogo G.J.S. Wakasyaka, Rtd Major M. Malonza S. Odhiambo (Mrs) Dr. J. Kahunyo C. Kabira W. Ongoro - Appointed - 26-04-06 PS Ministry of Finance - K.Mwangi (representing PS, Ministry of Finance) Commissioner of Co-operative Development - F. Odhiambo, DSM, MBS REGISTERED OFFICE AND HEAD OFFICE SUBSIDIARIES BRANCHES Co-operative House, Haile Selassie Avenue, P O Box 48231-00100, Tel: 020 3276000 NAIROBI Co-optrust Investment Services Ltd P O Box 48231-00100, Tel: 020 3276000 NAIROBI Co-operative Consultancy Services Kenya Ltd P O Box 48231-00100, Tel: 020 3276000 NAIROBI Co-operative House Branch P O Box 67881-00200, Tel: 020 3276000 NAIROBI Parliament Road Branch P O Box 67881-00200, Tel: 020 228974/5 NAIROBI Digo Road Branch P O Box 81535-50100, Tel: 020 228974/5 MOMBASA Kisumu Branch Oginga Odinga Road P O Box 1511-40100, Tel.057 2020753/2021763 KISUMU Co-op Card Centre P O Box 21831-00400, Tel 020 3276000 NAIROBI 1

BANK INFORMATION (Continued) BRANCHES (continued) Nkrumah Road Branch Nyahururu Branch P O Box 87771-80100 P O Box 20300-307 Tel: 041 2315375/6/7 Tel: 065 22330/1/32152 MOMBASA NYAHURURU Meru Branch Kiambu Branch Tom Mboya Street P O Box 00900-1064 P O Box 60200-1328 Tel: 066 22720/50592/22352 Tel.064 20461/2 KIAMBU MERU Nakuru Branch Eldoret Branch Geoffrey Kamau Road P O Box 30100-2948 P O Box 20100-2982 Tel: 053 2061167/2062717 Tel.051-2211574/5 ELDORET NAKURU Industrial Area Branch Homa Bay Branch Nanyuki Road P O Box 40300-406 P O Box 18119-00500 Tel: 055 30459/60 Tel.020 651875 HOMA BAY NAIROBI Kisii Branch Embu Branch P O Box 40200-2469 P O Box 60100-1337 Tel: 058 31510/30697 Tel: 068 30363/4 KISII EMBU Machakos Branch Kericho Branch Syo Kimau Road P O Box 200200-1742 P O Box 90100-1250 Tel: 052 30417/6 Tel.044 20215/6 KERICHO MACHAKOS Nyeri Branch Murang a Branch P O Box 10100-12253 P O Box 10200-954 Tel.061 2030751/2030815 Tel: 31174,30503/4 NYERI MURANG A Kerugoya Branch Karatina Branch P O Box 10300-635 P O Box 10101-931 Tel.060 21586/7 Tel: 061 72855/6/7 KERUGOYA NYERI Ukulima Branch University Way Branch Haile Selassie Avenue P O Box 60800-00200 P O Box 74956-00200 Tel: 020 225400/11/211818 Tel: 020-221273 NAIROBI NAIROBI 2

BANK INFORMATION (Continued) BRANCHES (continued) Chuka Branch Kakamega Branch P O Box 60400-101 P O Box 595 Tel: 064 630461/2/3 Tel: 056 31701/3/4/5, 31711, 31714 CHUKA KAKAMEGA Mumias Branch Staff Training Centre P O Box50102-90 P O Box 15355-00502 Tel.056 641463/641259 Tel: 020 891187/890132/891101 MUMIAS LANGATA, NAIROBI Athi River Branch Nairobi Business Centre P O Box 00204-321 P O Box 19555-00202 Tel: 045 22880/22875/6 ` Tel: 02011614/2711624/2711625/2711674 ATHI RIVER NAIROBI Stima Plaza Branch Bungoma Branch P O Box 00600-38764 P O Box 50200-1964 Tel.020 3740090/3755393/318878 Tel: 055 30459/60 NAIROBI BUNGOMA Thika Branch City Hall Branch P O Box 00100-815 P.O. Box 44805-00100 Tel: 067 21658/21815/8 Tel: 252126/33/49 THIKA NAIROBI NACICO Branch Maua Branch P O Box 00300-866, P O Box 00300-866, Tel.020 228659/230474 Tel.064 21548,21370,21114 NAIROBI MERU Kimathi Street Branch Githurai Branch P.O Box 7512-00200 P O Box 41420-00100 Tel: 020 315435/6/7/8 Tel.814112/3/4 NAIROBI NAIROBI Kitale Branch AGENCIES P.O Box 3058-30200, Magwagwa Agency Tel: 054 31611/31602/31603 c/o Kisii Branch KITALE P O Box 40200-2469 KISII Kariobangi Branch P O Box 00615-252, Muhoroni Agency Tel.020 781258 c/o Kisumu Branch NAIROBI P O Box 40100-1511 KISUMU Kawangware Branch P O Box 46904-00100, Makutano Agency Tel: 020 576587/3876587 c/o Meru Branch NAIROBI P O Box 60200-1328 Tel: 064 20421 MERU 3

BANK INFORMATION (Continued) AGENCIES (continued) Migori Agency Via Homabay Branch Tel: 059 20131 HOMABAY Malaba Agency Via Bungoma Tel: 055 540095 BUNGOMA BANKERS Central Bank of Kenya P O Box 60000-00100, Tel 020 2860000/2861000/2863000 NAIROBI LAWYERS AUDITORS Various A list is available at the Bank Ernst & Young Kenya-Re Towers, Upperhill, Off Ragati Road, P O Box 44286-00100 NAIROBI 4

REPORT OF THE DIRECTORS The directors submit their report together with the audited financial statements for the year ended 31 December 2006, which show the state of the Group s and the Bank s affairs. 1. PRINCIPAL ACTIVITIES The Bank offers banking and related services and is licensed under the Banking Act. 2. GROUP OPERATIONS The operating results of the Bank s subsidiaries, Co-optrust Investment Services Limited and the Co-operative Consultancy Services Kenya Limited have been included in the group financial statements. Co-operative Consultancy Services Kenya Limited offers financial advisory services. Co-optrust Investment Services Limited is involved in the business of fund management. 3. RESULTS The results of the Group for the year are set out on page 9. 4. DIVIDEND The directors recommend the payment of a dividend of KShs 5 per share (2005 - KShs 5 per share). 5. RESERVES The movement in the Group s reserves is shown on page 12 of these financial statements. 6. DIRECTORS The directors who served during the year and to the date of this report were: - S. C. Muchiri, EBS - Chairman J. Riungu - Vice Chairman G. M. Muriuki, OGW - Managing Director J. Sitienei P. K. Githendu G. Mburia R. L. Kimanthi E.K. Mbogo G.J.S. Wakasyaka, Rtd Major M. Malonza S. Odhiambo (Mrs) Dr. J. Kahunyo C. Kabira W. Ongoro - Appointed - 26-04-06 PS Ministry of Finance - K.Mwangi(representing PS, Ministry of Finance) Commissioner of Co-operative Development - F. Odhiambo, DSM, MBS 7. AUDIT COMMITTEE The Bank s audit committee consists of:- J. Riungu - Chairman Dr. J. Kahunyo K.Mwangi 8. AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office in accordance with Section 25(3) of the Co-operative Societies Act and subject to section 24(1) of the Banking Act. By order of the Board Managing Director...2007 5

STATEMENT OF DIRECTORS RESPONSIBILITIES FOR THE The Co-operative Societies and the Kenyan Companies Acts require the directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and the Bank as at the end of the financial year and of its operating results for that year. They also require the directors to ensure the Group and the Bank keep proper accounting records which disclose with reasonable accuracy, the financial position of the Group and the Bank. They are also responsible for safeguarding the assets of the Group and the Bank. The directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards and in the manner required by the Cooperative Societies and the Kenyan Companies Acts. The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Group and the Bank and of its operating results. The directors further accept responsibility for the maintenance of accounting records which may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control. Nothing has come to the attention of the directors to indicate that the Group and the Bank will not remain a going concern for at least the next twelve months from the date of this statement. CHAIRMAN. VICE CHAIRMAN. MANAGING DIRECTOR. COMPANY SECRETARY Date 6

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF THE CO-OPERATIVE BANK OF KENYA LIMITED We have audited the financial statements on pages 8 to 40 for the year ended 31 December 2006, and have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purpose of our audit. The financial statements are in agreement with the books of account. RESPECTIVE RESPONSIBILITIES OF THE DIRECTORS AND THE INDEPENDENT AUDITORS As stated on page 6, the directors are responsible for the preparation of financial statements which give a true and fair view of the state of the affairs of the Group and the Bank and of their operating results. Our responsibility is to express an independent opinion on the financial statements based on our audit and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. OPINION In our opinion, proper books of account have been kept and the financial statements, give a true and fair view of the state of the financial affairs of the Group and the Bank at 31 December 2006 and of the profit and cash flows of the Group and the Bank for the year then ended and comply with the Cooperative Societies Act, the Kenyan Companies Act and the International Financial Reporting Standards. Nairobi......2007 7

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 Note 2006 2005 KShs'000 KShs'000 ASSETS Cash and balances with Central Bank of Kenya 2 5,281,056 4,586,617 Deposits and balances due from banks 3 3,433,908 1,833,842 Trading investments 4 2,114,438 3,030,813 Non trading investments 6 13,325,043 8,317,075 Loans and advances to customers 7(a) 28,036,652 29,088,569 Other assets 8 2,366,386 2,011,868 Intangible assets 9 141,534 137,827 Prepaid lease rentals 10 42,592 43,196 Property and equipment 11(a) 2,793,787 2,556,410 Deferred tax 12 152,988 226,256 TOTAL ASSETS 57,688,384 51,832,473 LIABILITIES Deposits and balances due to banks 13 2,279,052 740,375 Customer deposits 14 48,182,587 43,601,821 Loans 15 283,469 1,918,161 Other borrowings 16 54,816 - Tax payable 17(b) 334,754 1,658 Other liabilities 18 1,719,240 1,503,848 TOTAL LIABILITIES 52,853,918 47,765,863 EQUITY Share capital 19 2,660,363 2,618,977 Reserves 1,343,685 598,836 Capital grants 21 697,400 717,848 Proposed dividend 22 133,018 130,949 TOTAL EQUITY 4,834,466 4,066,610 TOTAL LIABILITIES & EQUITY 57,688,384 51,832,473 The financial statements were approved by the Board of Directors on..........2007 and signed on its behalf by: - S.C. Muchiri - Chairman. J. Riungu - Vice Chairman G.M. Muriuki - Managing Director.. R. M. Githaiga (Mrs.) - Company Secretary. 8

CONSOLIDATED INCOME STATEMENT Note 2006 2005 KShs'000 KShs'000 Interest income 23 4,417,732 4,241,389 Interest expense 24 1,078,849 1,498,820 NET INTEREST INCOME 3,338,883 2,742,569 Commissions 2,508,935 2,124,093 Foreign exchange gain 299,110 196,713 Net gains from disposal of investments 18,033 1,806 Changes in fair value of investments (76,544) (30,016) Amortisation of investments held to maturity (29,118) (35,288) Amortisation of capital grants 20,448 28,217 Other income 25 837,215 270,689 OPERATING INCOME 6,916,962 5,298,783 Operating expenses:- Provision for impairment of loans and advances 7c (i) 1,424,644 1,163,557 Other operating expenses 26 4,236,318 3,421,225 OPERATING EXPENSES 5,660,962 4,584,782 PROFIT BEFORE TAXATION 27 1,256,000 714,001 TAX CHARGE 17(a) (389,488) (267,867) PROFIT FOR THE YEAR 866,512 446,134 Earnings per share (KShs) 28 32.83 27.36 9

BANK BALANCE SHEET AS AT 31 DECEMBER 2006 Note 2006 2005 ASSETS KShs'000 KShs'000 Cash and balances with Central Bank of Kenya 2 5,281,056 4,586,617 Deposits and balances due from other banks 3 3,433,908 1,833,842 Trading investments 4 2,103,638 3,030,175 Amount due from subsidiary company 5(a) - 3,755 Non trading investments 6 13,359,411 8,375,994 Loans and advances to customers 7(a) 28,036,921 29,088,569 Other assets 8 2,336,645 1,956,582 Intangible assets 9 141,534 137,827 Prepaid lease rental 10 42,592 43,196 Property and equipment 11(b) 2,789,957 2,555,156 Deferred tax 12 152,839 225,816 TOTAL ASSETS 57,678,501 51,837,529 LIABILITIES Deposits and balances due to banks 13 2,279,052 740,375 Customer deposits 14 48,200,693 43,617,508 Loans 15 283,469 1,918,161 Other borrowings 16 54,816 - Amount due to subsidiary company 5(b) 3,328 - Tax payable 17(b) 330,607 2,124 Other liabilities 18 1,716,736 1,502,531 TOTAL LIABILITIES 52,868,701 47,780,699 EQUITY Share capital 19 2,660,363 2,618,977 Reserves 20 1,319,019 589,056 Capital grants 21 697,400 717,848 Proposed dividends 22 133,018 130,949 TOTAL EQUITY 4,809,800 4,056,830 TOTAL LIABILITIES & EQUITY 57,678,501 51,837,529 The financial statements were approved by the Board of Directors on..........2007 and signed on its behalf by:- S. C. Muchiri - Chairman J. Riungu - Vice Chairman G. M. Muriuki - Managing Director R. M. Githaiga (Mrs) - Company Secretary 10

BANK INCOME STATEMENT Note 2006 2005 KShs'000 KShs'000 Interest income 23 4,414,411 4,240,041 Interest expense 24 1,078,849 1,498,820 NET INTEREST INCOME 3,335,562 2,741,221 Commissions 2,458,541 2,088,474 Foreign exchange gain 299,110 196,713 Net gains(loss) from disposal of investments 17,790 (1,139) Changes in fair value of investments (76,538) (30,016) Amortisation of investments held to maturity (28,993) (35,288) Amortisation of capital grants 20,448 28,217 Other income 25 831,135 270,689 OPERATING INCOME 6,857,055 5,258,871 Provision for impairment of loans and advances 7c (i) 1,424,644 1,163,557 Administration 26 4,198,980 3,389,669 OPERATING EXPENSES 5,623,624 4,553,226 PROFIT BEFORE TAXATION 27 1,233,431 705,645 TAX CHARGE 17(a) (381,806) (265,685) PROFIT FOR THE YEAR 851,625 439,960 Earnings per share (KShs) 28 32.26 27.04 11

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Capital General Share transfer Share Proposed Revenue Share capital reserve reserve fund fractions dividends reserves Total KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 Balance at 1 January 2005 2,285,048 315,877 3,100 522 63 91,402 (48,031) 2,647,981 Realisation of revaluation surplus - (4,368) - - - - 4,368 - Net movement in revenue grants for the year - - - - - - 10,806 10,806 Deferred tax - 1,310 - - - - - 1,310 Issue of share 333,929 - - - 4 - - 333,933 Dividends paid - - - - - (91,402) - (91,402) Profit for the year - - - - - - 446,134 446,134 Proposed dividends - - - - - 130,949 (130,949) - BALANCE AT 31 DECEMBER 2005 2,618,977 312,819 3,100 522 67 130,949 282,328 3,348,762 Balance at 1 January 2006 2,618,977 312,819 3,100 522 67 130,949 282,328 3,348,762 Realisation of revaluation surplus - (4,368) - - - - 4,368 - Net movement in revenue grants for the year - - - - - - 10,042 10,042 Deferred tax - 1,310 - - - - - 1,310 Issue of shares 41,386-3 - 41,389 Dividends paid - - - - - (130,949) - (130,949) Profit for the year - - - - - - 866,512 866,512 Proposed dividends - - - - - 133,018 (133,018) - BALANCE AT 31 DECEMBER 2006 2,660,363 309,761 3,100 522 70 133,018 1,030,232 4,137,066 12

CONSOLIDATED CASH FLOW STATEMENT CASH FLOWS FROM OPERATING ACTIVITIES:- Note 2006 2005 KShs'000 KShs'000 Profit before taxation 1,256,000 714,001 Adjustments for: Depreciation 281,004 325,945 Amortisation of prepaid lease rentals 604 716 Provision for diminution in value of investment 1,400 1,400 Impairment of plant, property and equipment 38,602 - Amortisation of intangible assets 66,511 83,361 Amortisation of capital grants (20,448) (28,217) Gain on disposal of property and equipment (1,693) (2,131) Foreign exchange gain (299,110) (196,713) Unrealised loss on re-measurement of investments 76,544 30,016 Amortisation of investments held to maturity 29,118 35,288 Dividend income - (116) Cash flows from operating activities before working capital changes 1,428,532 963,550 Advances to customers 1,051,917 (2,079,855) Other assets (336,628) 517,113 Deposits from customers 4,580,766 8,172,261 Deposits from banks 1,538,677 (3,564,260) Other liabilities 215,392 318,443 Central Bank of Kenya cash ratio (436,836) (464,073) Trading investments 839,831 269,866 Non-trading investments (4,784,930) 177,900 Cash generated from operating activities 4,096,721 4,310,945 Tax paid (20,179) (3,902) Net cash flows from operating activities 4,076,542 4,307,043 CASH FLOWS FROM INVESTING ACTIVITIES:- Purchase of property & equipment (560,024) (548,528) Purchase of software (67,802) (65,452) Proceeds from disposal of property and equipment 2,318 4,336 Dividends received - 116 Net cash flows used in investing activities:- (625,508) (700,930) CASH FLOWS FROM FINANCING ACTIVITIES:- Proceeds on issue of share capital 41,386 333,930 Loans received 60,316 - Dividends paid (130,949) (91,402) Repayment of loans (1,640,192) (235,500) Share fractions 3 4 Net cash flows (used)/from financing activities (1,669,436) 7,032 Net movement in cash and cash equivalents 1,781,598 3,702,135 Cash and cash equivalents at the beginning of the year 8,199,496 4,300,648 Effects of exchange rate changes 299,110 196,713 Cash and cash equivalents at the end of the year 29 10,280,204 8,199,496 13

NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES a) Basis of preparation The consolidated financial statements are prepared under the historical cost convention as modified by the measurement at fair value of trading and available for sale investment securities. The accounting policies are consistent with those used in prior years. These consolidated financial statements are prepared in accordance with and comply with International Financial Reporting Standards. b) Consolidation The results of Co-optrust Investment Services Limited and Co-operative Consultancy Services Kenya Limited, both wholly owned subsidiaries of the Bank, have been incorporated in the Group financial statements. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control is achieved where the Bank has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The accounting policies for the subsidiaries are consistent with the policies adopted by the Bank. c) Significant accounting judgments and estimates The preparation of financial statements in conformity with IFRSs requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the directors best knowledge of current events and actions, actual results ultimately may differ from those estimates. The most significant use of judgments and estimates are as follows: i) Impairment losses on loans and advances The Group reviews its loans and advances at each reporting date to assess whether an allowance for impairment should be recognised in the income statement. In particular, judgement by the directors is required in the estimation of the amount and timing of future cash flows when determining the level of allowance required. Such estimates are based on the assumptions about a number of factors and actual results may differ, resulting in future changes in the allowance. In addition to specific allowances against individual significant loans and advances, the Group makes a collective impairment allowance against exposures which, although not specifically identified as requiring a specific allowance, have a greater risk of default than when originally granted. This takes into consideration such factors as any deterioration in industry, technological obsolescence, as well as identified structural weaknesses or deterioration in cash flows. 14

1. ACCOUNTING POLICIES (continued) ii) iii) iv) Fair value of financial instruments Where the fair values of the financial assets and liabilities recorded on the balance sheet cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Deferred tax assets Deferred tax assets are recognised for all unused tax losses to the extent that it is possible that taxable profit will be available against which the losses can be utilised. Significant directors judgement is required to determine the amount of deferred tax asset that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Pensions The cost of the defined benefit pension plan is determined using actuarial valuation. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long term nature of these plans, such estimates are subject to significant uncertainty. d) Recognition of income and expenses Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific criteria must be met before revenue is recognised: i) Interest and similar income and expenses For all financial instruments measured at amortised cost and interest bearing financial instruments classified as available-for-sale financial instruments, interest income or expense is recognised at the effective interest rate, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability. The carrying amount of the financial asset or financial liability is adjusted if the Group revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original effective interest rate and the change in carrying amount is recognised as interest income or expense. Interest income is recognised in the income statement for all interest bearing instruments on an accrual basis taking into account the effective yield on the asset. Interest income is not recognised where recoverability of the advances of the Bank's own funds is uncertain. Interest on the Government and Donor funds is recognised as income on accrual basis ii) iii) Dividend income Dividends from equity investments are recognised when the shareholder s right to receive payment is established. Fee and commission income arises on financial services provided by the Bank. Fee and commission income Fees and commissions are generally recognised on an accrual basis when the service has been provided. Commission and fees arising from negotiating, or participating in the negotiation of a transaction for a third party is recognised on completion of the underlying transaction. 15

1. ACCOUNTING POLICIES (continued) iv) Rental income Rental income is accounted for on a straight-line basis over the lease terms on ongoing leases. e) Property and equipment Property and equipment are stated at cost or valuation less accumulated depreciation. Depreciation on property and equipment is calculated on straight-line basis; at annual rates estimated to write off carrying values of the assets over their expected useful lives. The annual depreciation rates in use are: - % Buildings 2.5 Fixtures 12.5 Furniture and equipment 20.0 Motor vehicles 20.0 Office machinery 20.0 Computers 20.0 f) Operating leases Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. g) Intangible assets and amortisation Intangible assets are stated at cost, less accumulated amortisation. Amortisation is calculated on straight-line basis at annual rates estimated to amortise the carrying values of the assets over their expected useful lives. h) Bad and doubtful debts i) An assessment is made at each balance sheet date to determine whether there is objective evidence that a specific loan or advance may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and any impairment, based on the net present value of future anticipated cash flows including anticipated recoveries from guarantees and collateral, discounted at effective interest rates, recognised in the statement of income. In addition to specific allowances against individual significant loans and advances, the Group makes a collective impairment allowance against exposures which, although not specifically identified as requiring a specific allowance, have a greater risk of default than when originally granted. This takes into consideration such factors as any deterioration in industry, technological obsolescence, as well as identified structural weaknesses or deterioration in cash flows. A general provision is made at the rate of 1% of loans and advances classified under normal and 3% for watch categories as per the Central Bank Kenya prudential guidelines. ii) No provision has been made for advances made from Government and Donor funds, since these are disbursed on an agency basis. iii) Advances are written off/down when the directors are of the opinion that their recoverability will not materialise. i) Foreign currency transactions Transactions in foreign currencies are translated at the rates ruling on the transaction dates. Balances in foreign currencies are translated at the Central Bank of Kenya rates ruling on the balance sheet date. Any resulting gains or losses on exchange are dealt with in the income statement in the period in which they arise. 16

1. ACCOUNTING POLICIES (continued) j) Financial Instruments i) Loans and advances to customers Loans and advances to customers are financial assets with fixed or determinable payments and are not quoted in an active market. After initial measurement at cost, loans and advances to customers are subsequently measured at amortised cost using the effective interest rate method, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. k) Financial Instruments i) Loans and advances to customers Loans and advances to customers are financial assets with fixed or determinable payments and are not quoted in an active market. After initial measurement at cost, loans and advances to customers are subsequently measured at amortised cost using the effective interest rate method, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. ii) Investments held for trading Investments held for trading are those which were either acquired for generating a profit from short-term fluctuations in price or dealer s margin, or are securities included in a portfolio in which a pattern of short-term profit taking exists. Investments held for trading are initially recognised at cost and subsequently re-measured at fair value based on quoted bid prices or dealer price quotations, without any deduction for transaction costs. All related realised and unrealised gains and losses are included in the income statement. Interest earned whilst holding held for trading investments is reported as interest income. iii) Held to maturity investments Held to maturity financial investments are those which carry fixed or determinable payments and have fixed maturities and which the Group has the intention and ability to hold to maturity. After initial measurement, held to maturity financial investments are subsequently measured at amortised cost using the effective interest rate method, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest rate. The amortisation and losses arising from impairment of such investments are recognised in the income statement. iv) Available for sale investments Investment securities intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity, or changes in interest rates, exchange rates or equity prices are classified as available for sale and are initially recognised at cost. Available for sale investments are subsequently re-measured at fair value, based on quoted bid prices or amount derived from cash flow models. Unrealised gains and losses arising from changes in the fair value of securities classified as available for sale are recognised directly in equity until the asset is de-recognised, at which time the cumulative gains or losses previously recognised in equity shall be recognised in the income statement. 17

1. ACCOUNTING POLICIES (continued) l) Fair values For financial instruments traded in an organised financial market, fair value is determined by reference to quoted market prices. For unquoted equity investments fair value is determined by reference to the market value of a similar investment where applicable. m) Employee benefits The Group contributes to a defined benefits pension scheme for its employees. Pension costs are assessed using the projected unit credit method. Under this method, the cost of providing pensions is charged to the income statement so as to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who value the pension plan once every three years. The pension obligation is measured at the present value of the estimated future cash outflows using interest rates of government securities that have terms to maturity approximating the terms of the related liability. All actuarial gains and losses are spread over the average remaining service lives of the employees. The Group also contributes to a statutory defined contribution pension scheme, the National Social Security Fund (NSSF). Contributions are determined by local statute and are currently limited to KShs 200 per employee per month. The monetary liability for employees accrued annual leave entitlement at the balance sheet date is recognised as an expense accrual. n) Taxation Current taxation is provided for on the basis of the results for the year as shown in the financial statements, adjusted in accordance with the tax legislation. Deferred taxation is provided for using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which deductible temporary differences, unused tax losses and the unused tax credits can be utilised. o) Grants Grants related to property and equipment are deferred and utilised in the reduction of the carrying amounts of the related assets over their useful lives. Grants related to financing specific projects identified by donors are held in reserves and reduced by provisions against specific projects that are considered bad or doubtful. p) Cash and cash equivalents Cash and cash equivalents comprise balances with maturities of less than 91 days from the date of acquisition and include cash and balances with Central Bank of Kenya excluding cash reserve ratio, government securities and deposits and balances due from banking institutions. q) Repurchase agreement transactions Assets sold with a simultaneous commitment to repurchase at a specified future date (repos) are recognised in the balance sheet and are measured in accordance with accounting policies for non-trading investments. The liability for amounts under these agreements is included in deposits and balances due to banks and balances with Central Bank of Kenya. The difference between sale and repurchase price is treated as interest expense using the effective yield method. 18

1. ACCOUNTING POLICIES (continued) r) Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its financial assets, tangible and intangible assets, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amounts of the asset is estimated and an impairment loss is recognised in the income statement whenever the carrying amount of the asset exceeds its recoverable amount. Where it is not possible to estimate the recoverable amount of an individual asset, the Directors estimate the recoverable amount of the cash-generated unit to which the asset belongs. s) Guarantees, acceptances and letters of credit Guarantees, acceptances and letters of credit are accounted for as off-balance sheet transactions and disclosed as contingent liabilities. t) Dividends Dividends are charged to equity in the year in which they are declared. Proposed dividends are shown as a separate component of equity until declared. 19

2. CASH AND BALANCES WITH CENTRAL BANK OF KENYA GROUP BANK 2006 2005 2006 2005 KShs 000 KShs 000 KShs 000 KShs 000 Cash on hand 2,196,647 1,372,319 2,196,647 1,372,319 Central Bank of Kenya 3,084,409 3,214,298 3,084,409 3,214,298 3. DEPOSITS AND BALANCES DUE FROM BANKS 5,281,056 4,586,617 5,281,056 4,586,617 GROUP BANK 2006 2005 2006 2005 KShs 000 KShs 000 KShs 000 KShs 000 Commercial banks 287,840 788,889 287,840 788,889 Foreign banks 3,146,068 1,044,953 3,146,068 1,044,953 4. TRADING INVESTMENTS 3,433,908 1,833,842 3,433,908 1,833,842 Treasury bonds 2,114,438 3,030,813 2,103,638 3,030,175 5. (a) AMOUNT DUE FROM SUBSIDIARY COMPANY BANK 2006 2005 KShs 000 KShs 000 Co-optrust Investments Services Limited - 3,755 Interest is not charged on amounts from group companies (b) AMOUNT DUE TO SUBSIDIARY COMPANY Co-op Consultancy Services Kenya Limited 3,328-20

6. NON TRADING INVESTMENTS GROUP BANK 2006 2005 2006 2005 KShs 000 KShs 000 KShs 000 KShs 000 a) Held to maturity investments Government treasury bills Treasury bonds maturing within 91 4,427,729 4,216,178 4,427,729 4,216,178 days of the balance sheet date 101,471 89,983 101,471 89,983 Treasury bonds maturing after 91 days of the balance sheet date 8,717,744 3,931,415 8,692,112 3,930,334 b) Unquoted investments 13,246,944 8,237,576 13,221,312 8,236,495 i) Investment in subsidiaries:- Ownership Co-operative House Ltd 1,020,000 A 100% ordinary shares of KShs 20 each 20,400 20,400 20,400 20,400 980,000 B ordinary shares of KShs 20 each 19,600 19,600 19,600 19,600 Co-op Consultancy Services Kenya Ltd100% - - 40,000 40,000 Co-optrust Investment Services Ltd 100% - - 20,000 20,000 40,000 40,000 100,000 100,000 ii) Available for sale equity shares Consolidated Bank of Kenya Ltd:- 135,000 ordinary shares of KShs.20 each 580,000 4% non-cumulative 2,400 2,400 2,400 2,400 preference shares of KShs.20 each 11,600 11,600 11,600 11,600 Co-operative Insurance Services Ltd: - 54,500 ordinary shares of KShs.20 each 1,090 1,090 1,090 1,090 Kenya National Federation of Co-operatives Ltd:- 82 shares of KShs.100 each 8 8 8 8 Kenya National Housing Co-operative Union Ltd:- 1 share of KShs.1,000 1 1 1 1 Menno Plaza Ltd 12.39% 30,000 30,000 30,000 30,000 45,099 45,099 45,099 45,099 Less: Provision for diminution in value of investment in Consolidated Bank of Kenya Ltd (7,000) (5,600) (7,000) (5,600) 38,099 39,499 38,099 39,499 Total equity investments 78,099 79,499 138,099 139,499 Total non trading investments 13,325,043 8,317,075 13,359,411 8,375,994 The weighted average effective interest rate on held to maturity investments as at 31 December 2006 was 8.1% (2005-8.1%) 21

6. NON TRADING INVESTMENTS (continued) iii) Co-operative House Limited is a non-trading, wholly owned subsidiary of the Bank. Co-operative, Consultancy Services Kenya Limited and Co-optrust Investment Services Limited are wholly owned subsidiaries. Included under available for sale investments are unquoted equity investments, which are carried at cost amounting to KShs 39.5 million due to lack of comparable quoted investment which could have been used as a basis for the determination of fair value. In the opinion of the directors, the above investments would, if sold, realise not less than the amounts at which they are stated. Investment in Government securities are intended to be held to maturity and are carried at amortised cost. Discount or premium on these securities is amortised on a pro rata basis. 7. LOANS AND ADVANCES TO CUSTOMERS GROUP BANK 2006 2005 2006 2005 KShs 000 KShs 000 KShs 000 KShs 000 a) Net loans and advances Overdrafts 1,952,233 2,611,361 1,952,502 2,611,361 Commercial loans 39,262,839 38,110,985 39,262,839 38,110,985 Government/Donor funded loan schemes 2,024,695 2,709,142 2,024,695 2,709,142 Credit card balances 857,693 669,071 857,693 669,071 Micro enterprises 594,819 447,304 594,819 447,304 Gross loans and advances 44,692,279 44,547,863 44,692,548 44,547,863 Provision for impairment of loans and advances (note 7c) (16,655,627) (15,459,294) (16,655,627) (15,459,294) 28,036,652 29,088,569 28,036,921 29,088,569 b) Sectoral analysis:- Agriculture 5,001,239 7,740,361 5,001,239 7,740,361 Manufacturing 622,602 158,557 622,602 158,557 Construction 7,581,418 8,866,938 7,581,418 8,866,938 Service 19,185,520 13,502,082 19,185,789 13,502,082 Other 12,301,500 14,279,925 12,301,500 14,279,925 44,692,279 44,547,863 44,692,548 44,547,863 c) Provision for impairment of loans and advances (i) Specific provisions: Balance at 1 January 15,074,593 12,969,446 15,074,593 12,969,446 Specific provisions made during the year 1,424,644 1,163,557 1,424,644 1,163,557 Interest not recognised as (expense)/income (208,502) 996,642 (208,502) 996,642 Specific provisions written back (19,809) (55,052) (19,809) (55,052) Balance at 31 December 16,270,926 15,074,593 16,270,926 15,074,593 (ii) General Provisions: Balance at 1 January 384,701 519,611 384,701 519,611 General provisions written back - (134,910) - (134,910) Balance at 31 December 384,701 384,701 384,701 384,701 22 16,655,627 15,459,294 16,655,627 15,459,294

7. ADVANCES TO CUSTOMERS (continued) d) The Bank continues to carry classified doubtful debts and delinquent accounts on its books even after making allowances for impairment in accordance with IAS 39. Interest is accrued on these accounts for contractual/litigation purposes only and accordingly not taken to income. The value of such accounts/loans at year end was KShs 17.47 billion (2005 KShs. 17.78 billion). e) The weighted average effective interest rate at 31 December 2006 on loans and advances was 9.75% (2005 10.37%) 8. OTHER ASSETS GROUP BANK 2006 2005 2006 2005 KShs 000 KShs 000 KShs 000 KShs 000 Interest receivable 291,453 235,960 291,453 235,960 Deposits with default financial Institutions 43,052 43,052 43,052 43,052 Deferred clearing 1,497,652 1,196,747 1,497,652 1,196,747 Sundry debtors and prepayments 577,281 579,161 547,540 523,875 2,409,438 2,054,920 2,379,697 1,999,634 Provision for deposits with default financial institutions (43,052) (43,052) (43,052) (43,052) 9. INTANGIBLE ASSETS 2,366,386 2,011,868 2,336,645 1,956,582 Software in use by the group companies: Cost at 1 January 427,139 357,127 411,677 341,665 Transfers 164,160 4,560 164,160 4,560 Additions 67,802 65,452 67,802 65,452 Cost at 31 December 659,101 427,139 643,639 411,677 Accumulated amortisation at 1 January 289,312 204,127 273,850 189,689 Transfers 161,744 1,824 161,744 1,824 Amortisation for the year 66,511 83,361 66,511 82,337 Accumulated amortisation at 31 December 517,567 289,312 502,105 273,850 Net book value at 31 December 141,534 137,827 141,534 137,827 GROUP AND BANK 10. PREPAID LEASE RENTALS 2006 2005 KShs 000 KShs 000 Cost At 1 January and 31 December 55,568 55,568 Amortisation: At 1 January (12,372) (11,656) Charge for the year (604) (716) At 31 December (12,976) (12,372) Net book value at 31 December 42,592 43,196 Prepaid lease rentals relate to the cost of leasehold land. 23

11(a) PROPERTY AND EQUIPMENT-GROUP Freehold land & buildings Capital work-in progress Office machinery Furniture & equipment Motor vehicles Fixtures Computers Total KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 COST/VALUATION At 1 January 2006 1,759,087 225,491 65,186 479,355 116,869 714,933 1,412,695 4,773,616 Additions - 256,878 11,120 59,296 8,782 2,909 221,039 560,024 Disposals - - - - (12,375) - - (12,375) Reclassification - - - - - - (164,160) (164,160) Impairment - (31,372) 21,684 (57,683) - (13,480) (52,062) (132,913) Write offs At 31 December 2006 1,759,087 450,997 97,990 480,968 113,276 704,362 1,417,512 5,024,192 Comprising: Cost 1,287,912 450,997 97,990 480,968 113,276 704,362 1,417,512 4,553,017 Valuation 471,175 - - - - - - 471,175 1,759,087 450,997 97,990 480,968 113,276 704,362 1,417,512 5,024,192 DEPRECIATION At 1 January 2006 203,329-47,023 382,556 85,445 413,065 1,085,788 2,217,206 Charge for the year 42,767-7,447 35,897 14,814 50,525 129,554 281,004 Disposals - - - - (11,750) - - (11,750) Reclassification - - - - - - (161,744) (161,744) Impairment (2,157) - 24,636 (50,791) (1,430) (11,223) (53,346) (94,311) At 31 December 2006 243,939-79,106 367,662 87,079 452,367 1,000,252 2,230,405 NET BOOK VALUE At 31 December 2006 1,515,148 450,997 18,884 113,306 26,197 251,995 417,260 2,793,787 i. Capital work-in-progress represents ongoing construction work at the various branches of the Bank. ii. Buildings were revalued in February 1996 by Gatheru, Irungu and Mugo Professional Valuers on the basis of open market value. The resulting surplus on revaluation was transferred to capital reserve (Note 20). iii. Freehold land and buildings include an amount of KShs. 55,426,467 (2005-KShs 55,426,467) against which no depreciation has been charged, as these are not in use. iv. No depreciation has been charged in arriving at the results for the year in respect of certain fully depreciated property and equipment with a cost of KShs.1,495,286,649 (2005 KShs1,208,945,160), which are still in use. If depreciation had been charged during the year on the cost of these assets at normal rates, it would have amounted to KShs.231,472,145(2005 KShs. 221,217,971). Included in these fully depreciated assets is KShs 4,156,602 representing idle assets in the process of being disposed. v. During the year, the group carried out a physical verification of its property and equipment. As a result computer software previously classified as computers were reclassified to 24

intangible assets. The management also carried out an impairment review and the resultant impairment loss recognised in the income statement. Fully depreciated assets no longer in use were written off. 11(a) PROPERTY AND EQUIPMENT-GROUP(Continued) Freehold land & buildings Capital work-in progress Office machinery Furniture & equipment Motor vehicles Fixtures Computers Total KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 COST/VALUATION At 1 January 2005 1,759,087 274,101 54,850 409,402 117,000 410,206 1,239,235 4,263,881 Additions - 237,930 10,336 72,061 18,900 4,688 204,613 548,528 Disposals - - - (2,108) (17,904) - (12,142) (32,154) Transfers - (286,540) - - - 300,039 (18,059) (4,560) Write offs - - - - (1,127) - (952) (2,079) At 31 December 2005 1,759,087 225,491 65,186 479,355 116,869 714,933 1,412,695 4,773,616 Comprising: Cost 1,287,912 225,491 65,186 479,355 116,869 714,933 1,412,695 4,302,441 Valuation 471,175 - - - - - - 471,175 1,759,087 225,491 65,186 479,355 116,869 714,933 1,412,695 4,773,616 DEPRECIATION At 1 January 2005 160,762-39,702 352,604 84,565 357,984 927,437 1,923,054 Charge for the year 42,567-7,321 31,773 17,154 55,081 172,049 325,945 Disposals - - - (1,821) (16,274) - (11,874) (29,969) Transfers - - - - - - (1,824) (1,824) At 31 December 2005 203,329-47,023 382,556 85,445 413,065 1,085,788 2,217,206 NET BOOK VALUE At 31 December 2005 1,555,758 225,491 18,163 96,799 31,424 301,868 326,907 2,556,410 25

11(b) PROPERTY AND EQUIPMENT-BANK Freehold land & buildings Capital work-in progress Office machinery Furniture & equipment Motor vehicles Fixtures Computers Total KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 COST/VALUATION At 1 January 2006 1,759,087 225,491 65,185 478,316 116,871 714,933 1,411,102 4,770,985 Additions - 256,878 11,120 59,039 6,497 2,909 220,412 556,855 Disposals - - - - (12,375) - - (12,375) Reclassification - - - - - - (164,160) (164,160) Impairment - (31,372) 21,684 (57,760) - (13,480) (52,062) (132,990) 1,759,087 450,997 97,989 479,595 110,993 704,362 1,415,292 5,018,315 At 31 December 2006 Comprising: Cost 1,287,912 450,997 97,989 479,595 110,993 704,362 1,415,292 4,547,140 Valuation 471,175 - - - - - - 471,175 1,759,087 450,997 97,989 479,595 110,993 704,362 1,415,292 5,018,315 DEPRECIATION At 1 January 2006 203,329-47,023 382,032 85,445 413,065 1,084,935 2,215,829 Charge for the year 42,767-7,447 35,683 14,662 50,525 129,265 280,349 Disposals - - - - (11,750) - - (11,750).Reclassification - - - - - - (161,744) (161,744) Impairment (2,157) - 24,636 (50,806) (1,430) (11,223) (53,346) (94,326) At 31 December 2006 243,939-79,106 366,909 86,927 452,367 999,110 2,228,358 NET BOOK VALUE At 31 December 2006 1,515,148 450,997 18,883 112,686 24,066 251,995 416,182 2,789,957 26

11(b) PROPERTY AND EQUIPMENT-BANK (Continued) Freehold land & buildings Capital work-in progress Office machinery Furniture & equipment Motor vehicles Fixtures Computers Total KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 KShs 000 COST/VALUATION At 1 January 2005 1,759,087 274,101 54,851 408,844 117,002 410,206 1,237,893 4,261,984 Additions - 237,930 10,334 71,580 18,900 4,688 204,362 547,794 Disposals - - - (2,108) (17,904) - (12,142) (32,154) Transfers - (286,540) - - - 300,039 (18,059) (4,560) Write offs - - - - (1,127) - (952) (2,079) At 31 December 2005 1,759,087 225,491 65,185 478,316 116,871 714,933 1,411,102 4,770,985 Comprising: Cost 1,287,912 225,491 65,185 478,316 116,871 714,933 1,411,102 4,299,810 Valuation 471,175 - - - - - - 471,175 1,759,087 225,491 65,185 478,316 116,871 714,933 1,411,102 4,770,985 DEPRECIATION At 1 January 2005 160,762-39,703 352,240 84,565 357,984 926,902 1,922,156 Charge for the year 42,567-7,320 31,613 17,154 55,081 171,731 325,466 Disposals - - - (1,821) (16,274) - (11,874) (29,969) Transfers/write offs - - - - - - (1,824) (1,824) At 31 December 2005 203,329-47,023 382,032 85,445 413,065 1,084,935 2,215,829 NET BOOK VALUE At 31 December 2005 1,555,758 225,491 18,162 96,284 31,426 301,868 326,167 2,555,156 27

12. DEFERRED TAX Deferred tax movement and balances are analysed as follows: Dealt with Dealt with in income in 2006 statement equity 2005 GROUP KShs 000 KShs 000 KShs 000 KShs 000 Tax losses carried forward - 129,016 - (129,016) Loan losses disallowed for tax purposes (115,410) - - (115,410) Revaluation surplus 92,929 (28,541) (1,310) 122,780 Accelerated depreciation over wear and tear (84,566) 321 - (84,887) Provisions and other deferred tax assets (45,941) (26,218) - (19,723) BANK (152,988) 74,578 (1,310) (226,256) Tax losses carried forward - 129,016 - (129,016) Loan losses disallowed for tax purposes (115,410) - - (115,410) Revaluation surplus 92,929 (28,541) (1,310) 122,780 Accelerated depreciation over wear and tear (84,340) 86 (84,426) Provisions and other deferred tax assets (46,018) (26,274) - (19,744) 13. DEPOSITS AND BALANCES DUE TO BANKS (152,839) 74,287 (1,310) (225,816) GROUP AND BANK 2006 2005 KShs'000 KShs'000 Payable within 30 days 2,279,052 62,399 Payable after 30 days but within 1 year - 677,976 2,279,052 740,375 14. CUSTOMER DEPOSITS GROUP BANK 2006 2005 2006 2005 KShs 000 KShs 000 KShs 000 KShs 000 a) Call deposits 3,327,940 3,666,811 3,327,940 3,666,811 Fixed deposits 7,723,601 14,401,624 7,723,601 14,401,624 Savings accounts 17,112,113 13,983,839 17,130,219 13,983,839 Current accounts 16,589,425 10,628,804 16,589,425 10,644,491 Foreign currency deposits 3,429,508 920,743 3,429,508 920,743 48,182,587 43,601,821 48,200,693 43,617,508 28

14 CUSTOMER DEPOSITS (continued) b) From government and parastatals:- GROUP BANK 2006 2005 2006 2005 KShs 000 KShs 000 KShs 000 KShs 000 Payable on demand 3,215,907 1,929,621 3,215,907 1,929,621 Payable within 30 days 1,833,892 1,861,538 1,833,892 1,861,538 Payable after 30 days but within 1 year 2,216,497 6,176,472 2,216,497 6,176,472 7,266,296 9,967,631 7,266,296 9,967,631 From private sector and individuals:- Payable on demand 17,808,040 9,310,723 17,808,040 9,326,410 Payable within 30 days 1,575,266 15,694,582 1,593,372 15,694,582 Payable after 30 days but within 1 year 21,532,985 8,628,885 21,532,985 8,628,885 40,916,291 33,634,190 40,934,397 33,649,877 48,182,587 43,601,821 48,200,693 43,617,508 Included in customers deposits is an amount of KShs 4,031 million (2005-KShs 1,270 million) that have been pledged to the Bank by customers as security for loans and advances. The weighted average effective interest rate on interest bearing customer deposits as at 31 December was 2.6% (2005 3.20% ). 29